Queensland Opposition Leader David Crisafulli paid $200,000 in settling claims from liquidators who alleged a training company he was a director of may have been trading while insolvent.
Mr Crisafulli has declined to answer questions about liquidators pursuing any claims into Southern Edge Training, which had been long struggling financially before he took over as sole director for four months in 2015 and 2016.
The Department of Employment and Workplace Relations confirmed to the ABC its predecessor organisation had funded liquidators to “issue demands and conduct settlement negotiations in relation to insolvent trading claims against the company’s directors”.
“A negotiated resolution was reached between the liquidator and Mr Crisafulli,” the department said.
The department did not provide settlement details, but the ABC obtained company accounts – filed with the corporate regulator – which list three “receipts from” David Crisafulli in the “settlement of other liquidators’ actions”.
They were $80,000 in March 2020, $60,000 in July 2020, and $60,000 in July 2021.
Liquidators can pursue directors for allegedly failing to prevent insolvent trading, and had flagged such potential actions following Southern Edge’s collapse.
But directors have defences available to such allegations, including if they have reasonable grounds to believe a company is solvent.
Settlements also can be reached in claims without anyone admitting liability.
Opposition leader’s office says ‘zero findings’ made against him
Asked about the settlement, Mr Crisafulli’s office told the ABC: “David met all his obligations in his short four-month tenure at a company that was in long-term trouble”.
“The facts are there were zero findings against him.”
After the ABC published the details of the payment, Mr Crisafulli told journalists on Friday that he did not make any admissions of liability.
He declined to detail on how he paid for settlement costs but again maintained he had met obligations and “learnt a few lessons on the way”.
Mr Crisafulli was a shadow minister during those first two payments, and opposition leader during the third.
The federal department funding the claims was then under the Morrison Coalition government – conservative colleagues of Mr Crisafulli’s LNP.
The department also funded claims against two training company directors there at different times to Mr Crisafulli.
Southern Edge Training had operations from Victoria to Queensland, received government funding, and taught courses from forklift driving to hospitality training.
Financial documents indicate it had struggled for more than a year before Mr Crisafulli took over as sole director on December 1, 2015.
He resigned on April 1, 2016, with another Queensland man becoming sole director.
Southern Edge, which traded as SET Solutions, was then put into voluntary liquidation on June 30, 2016, owing more than $3 million.
One creditor told the ABC that Mr Crisafulli had been a straight shooter during his time there and paid bills when promised.
The collapse’s timing was raised briefly in 2017, but Mr Crisafulli told parliament in 2018 he had not cut and run despite a promised capital injection not eventuating.
He maintained he had worked to bring in new revenue, new ownership and streamlined costs, all while never taking pay himself.
“I left the business without a single mark of wrongdoing against my conduct or actions,” he said then.
Accounting expert questions whether profitability statement shows full picture
Last month, the ABC revealed that a year later, PwC liquidators Robert Ditrich and Craig Crosbie issued a creditors report alleging their investigations “indicate the company appears to have traded while insolvent from at least December 1, 2015”.
The liquidators cited evidence including the Australian Taxation Office (ATO) sending a $112,576 legal demand and work-in-progress assets — representing the value of yet-to-be completed works on company books — being in their view “overstated and uncollectable” from January 2016.
The liquidators declined to comment last month if they had pursued any specific claims, saying they no longer had records access.
Since the ABC’s report, Mr Crisafulli has responded to questions in media conferences about the 2019 liquidator investigations by referring to his earlier 2018 statements.
His 2018 statements included the training business having “returned a profit each and every month” he had been there.
Dr Nicole Ang, from the University of NSW’s School of Accounting, Auditing and Taxation, said Mr Crisafulli’s statement about profitability was likely “technically correct”, but not the full picture.
That was due to factors including the liquidators’ allegations about the company having potentially traded while insolvent and creditor payment times being stretched.
Dr Ang said it was unclear what measure of profitability Mr Crisafulli was referring to, but assumed it was likely accrual accounting profits, not cash.
“At the end of the day, it doesn’t matter how great your reported accounting profit is if you don’t have the underlying cash inflow to support your operations,” she said.
The liquidators’ claim that assets were overstated would also have meant profits should have been reduced, given those assets should have been written down, she said.
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